Treasury is trying to toe the line as we face a stagnant economy

Minister of Finance Enoch Godongwana delivering his budget Speech. Picture: Ayanda Ndamane / Independent Newspapers

Minister of Finance Enoch Godongwana delivering his budget Speech. Picture: Ayanda Ndamane / Independent Newspapers

Published Feb 22, 2024


Anchor Capital said on Wednesday that National Treasury continued to toe the line between fiscal continuity, consolidation and declining revenues amid an increasingly stagnant local economy.

Casey Sprake, Investment Analyst for Fixed Income at Anchor Capital said that Treasury reduced its borrowings by using a portion of valuation gains in the Gold and Foreign Exchange Contingency Reserve Account (GFECRA).

National Treasury did this to help mitigate SA’s growing debt burden.

The government will receive R150 billion in distributions from the SA Reserve Bank (SARB) over three fiscal years: R100bn in 2024/2025, R25bn in 2025/2026 and R25bn in 2026/2027.

Treasury noted that using the GFECRA, debt-service costs will decline by R30.2bn over the 2024 Medium Term Expenditure Framework (MTEF) period compared with the 2023 Medium Term Budget Policy Statement (MTBPS) estimate.

Sprake said that this will reduce domestic market financing requirements and the growth of debt stock and debt-service costs.

She added that this “forms a useful short-term measure but does not address the longer-term structural issues of SA’s growing debt burden”.

Sprake said that government debt is now expected to stabilise at 75.3% of GDP in 2025/2026 (lower than the 77.7% projected in the 2023 MTBPS), this is directly thanks to the use of GFECRA and would allow debt‐service costs to absorb more than 20 cents of every rand collected in revenue.

Andrew Bahlmann, Chief Executive, Corporate and Advisory, Deal Leaders International said on Wednesday that the commitment by government to achieving a primary budget surplus and stabilising debt by 2025/26 suggests a positive trajectory for fiscal discipline.

“This can instil confidence among investors, both local and foreign, regarding the government's ability to manage its finances responsibly, which is crucial for long-term economic stability,” he added.

The narrowing of the consolidated budget deficit from 4.9% of GDP to 3.3% showed a concerted effort towards fiscal consolidation, he noted

“This may be viewed favourably by investors as it reduces the risk of fiscal imbalances that could lead to macroeconomic instability,” Bahlmann said.


After Finance Minister Enoch Godongwana announced this measure, the rand and international dollar bonds strengthened on Wednesday evening.

The rand was trading at around R18.85 against the dollar at 3pm after the minister finalised the speech.

The rand was sluggish on Thursday morning and was trading at around R18.91 to the dollar at 08:30am.

SA’s international bonds rose in value yesterday as a response to the 2024 budget speech, with the 2052 maturity jumping 1.58 cents on the dollar at 2.49pm to trade at 87.8 cents, according to Tradeweb data.

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